Judge Kathleen St. J. McCormick's ruling emphasized that the approval process of Elon Musk's compensation plan was "deeply flawed" due to Musk's close ties with directors, indicating a bias in the decision-making.
Musk's reaction to the ruling was vehement, calling it "totally crazy" and labeling it as "absolute corruption," reflecting his disbelief at the court's conclusions regarding the influence he exerted over the board.
Despite a favorable investor vote in June to approve Musk's pay package, the Delaware judge reaffirmed her decision, stressing that the board was unduly influenced when determining the package's price point.
Paul Graham, cofounder of Y Combinator, remarked on X that if activist judges continue to overrule shareholders, it would deter startups from incorporating in Delaware, traditionally a favored state for businesses.
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